Institutional FX Insights: JPMorgan Trading Desk Views 30/6/26
JPM G10 FX Daily
EUR: Rebuilding USD Length Into Payrolls
Half the year is nearly over.
It has been eventful, that is for sure.
There should be rebalancing noise today. Once that is out of the way, attention turns to another important payrolls print into a US holiday.
A strong print is needed to keep the market talking about Fed hikes into the July FOMC.
Who knew back in January that the market would be entertaining Fed hikes?
Even Lisa Cook had been a focus for Fed independence, and yesterday the Supreme Court ruled in her favour with barely a whisper.
Warsh speaks tomorrow at Sintra.
Some argue he may be freer to express his own views there rather than speaking on behalf of the committee as he did in his first press conference.
But I cannot believe he will give too much away.
Risk: Edging Back Long USD
Into these random few days, I am using the correction to edge back long dollars.
Last week, I suspected the USD had gone a bit too far.
Now, I am using the pullback to rebuild.
Current positioning:
Sold the EUR rally.
Still hoping for higher EUR/USD levels to add.
Reduced 50% of tactical cable longs after GBP traded well post-Burnham.
Still hold USD/CHF topside.
Remain long HUF and ZAR in EM.
EUR/USD: Better Risk/Reward to Short Rallies
We saw some short covering on the EUR rally yesterday.
I still think the single currency should be capped into payrolls.
That means the risk/reward for shorts is better now after the rally than it was at last week’s lows.
I have edged out some EUR shorts, although EUR/USD has not quite reached the levels I had hoped for yet.
Lagarde and other ECB governors have been speaking at Sintra.
The message has been hawkish overall, but not beyond what is already priced into rates markets.
So there is not much to do there.
Trade bias: Short EUR/USD on rallies.
Action: Sold rally; hoping for higher levels to add.
Catalysts: Warsh at Sintra, payrolls Thursday.
ECB: Hawkish, but already priced.
Risk: Soft payrolls or dovish Warsh squeeze EUR higher.
GBP: Burnham Momentum Supports Sterling
Gilts and sterling reacted fairly positively to Burnham’s devolution speech.
There was not much on expensive endeavours like privatisation.
Instead, Burnham showed more respect for:
Public finances
Britain’s investment credentials
Yes, Miliband continues to rise on Polymarket:
Miliband: 66%
Streeting: 11%
But it seems the market is recalibrating how bad “Red Ed” would actually be given Burnham’s influence and direction.
There is also some movement in the polls, with YouGov reporting Labour has almost halved the gap to Reform.
Momentum feels positive.
Ever since Burnham’s route to Number 10 took shape, his language has changed and has eased worries about his perceived left-wing credentials.
With a possible summer of carry ahead, it is hard to see GBP not continuing to trade well.
Strategy: Short EUR/GBP After Rebalancing
Today’s rebalancing covers month-end, quarter-end and half-year-end.
It could be a total mess.
I would like to come out of it short some EUR/GBP.
Preferred entry:
Rally toward 0.8640/50
Alternative trigger:
Break of 0.8600/10
All three tracked segments were GBP buyers yesterday, with DHF most keen at around 1.5z.
Cable zones remain:
Support: 1.3145/65
Resistance: 1.3300/20
Trade bias: Constructive GBP; prefer short EUR/GBP.
EUR/GBP sell zone: 0.8640/50.
Break trigger: 0.8600/10.
Cable zones: 1.3145/65–1.3300/20.
Risk: Miliband Chancellor concerns revive or USD rebalancing overwhelms.
JPY: Red Alert for MoF After 162 Break
I had been flagging a potentially rough month-end for JPY given the moves in the Nikkei.
That was enough to push USD/JPY through 162 in volatile fashion.
As regular readers will have guessed, I am now on red alert for bold MoF action.
Yes, the USD rally feels pervasive.
But the relaxation in yields and oil points to JPY-specific credibility issues.
That is further highlighted by weakness in the JGB complex.
Authorities will not like this.
And with the market now markedly shorter JPY than it was two months ago, everything is in place for action.
Timing and Tactics Matter Now
Timing and tactics are the name of the game.
Several conditions are supportive of intervention:
Value date rolling into next month is a small positive, as disclosure can be pushed out.
Upcoming US holiday illiquidity on Friday increases the chance of maximum discomfort and better bang for buck.
NFP is a risk, but weak payrolls could work in tandem with intervention.
I think investors should have some short cross-JPY exposure in the book for the rest of the week.
My favourite is CHF/JPY.
If it is just MoF acting, look to fade around a 5 big-figure move.
If, in the unlikely case, they get Scott on board via the fixed-income angle — contagion fears and reserve liquidation — the scope to stay longer JPY broadens clearly.
Katayama has reacted with top-level rhetoric.
But watch for Mimura.
Trade bias: Short cross-JPY exposure; CHF/JPY preferred.
USD/JPY: Broke 162.
MoF: Red alert for bold action.
Tactic: Fade around 5 big figures if unilateral MoF.
Risk: Coordinated angle broadens JPY upside; strong NFP supports USD/JPY.
CHF: Took Profit on USD/CHF, Buy Dips Toward 0.8000
CHF was one of the better performers yesterday on a difficult day to interpret in FX.
Month/quarter-end may have muddied the picture, as CHF often sees decent moves around these periods.
We had been long USD/CHF but have taken profit.
We are looking to buy a dip toward 0.8000 if CHF strengthens today.
Q1 official FX intervention data was released this morning.
It came in much lower than our research team estimated:
Actual: CHF 3bn
Estimate: CHF 17bn
This is not necessarily a game-changer.
We were not short CHF simply waiting for the SNB to intervene.
But it does show the SNB will likely rely more on rhetoric than actual market action.
Trade bias: Took profit; buy USD/CHF dips.
Buy zone: Toward 0.8000.
SNB intervention: CHF 3bn vs CHF 17bn estimate.
Implication: More rhetoric than actual intervention.
Risk: CHF keeps outperforming on month-end or risk-off flows.
AUD / NZD: AUD Underperformance Is Concerning
Despite a weaker USD and higher equities, AUD was a clear underperformer yesterday.
AUD lost ground on several crosses and AUD/USD was even lower despite DXY falling 0.25% during our session.
AUD underperforming on days when USD is weaker has become a recent theme.
That is concerning for AUD bulls.
Maybe the fall in gold weighed again, although that did not seem to affect ZAR.
The RBA minutes overnight were consistent with recent communication and confirmed a still-hawkish bias.
But the Q2 inflation print on 29 July will decide whether the hiking cycle is now complete.
AUD/USD: Watch the 200dma
Today is all about month/quarter/half-year rebalancing flows.
Maybe that was already in play yesterday.
I make no prediction on what happens today, but volatile moves are likely.
If AUD/USD can remain above the 200dma around 0.6862, I may revisit a tactical long.
Only a two-day close below that level would call for reassessment.
AUD/NZD: Interesting Downside Juncture
NZD outperformed overnight after ANZ Activity and Business Survey data rose.
That contrasts with the bleak NZIER survey, although NZIER was taken during the height of the Middle East conflict, while last night’s survey captured the recent peace deal.
Regular readers know I have been downbeat on the NZ economy.
But technically, AUD/NZD is starting to look interesting for those who have discussed downside with me recently.
Key levels:
50dma: 1.2165
Short-term trendline support: 1.2131
100dma: 1.2075
Next week’s RBNZ meeting will be important for cross direction given the current technical setup.
AUD/NZD is potentially at an interesting juncture.
Trade bias: Cautious AUD; potential tactical AUD/USD long only if 200dma holds.
AUD/USD key level: 0.6862 200dma.
AUD/NZD levels: 1.2165, 1.2131, 1.2075.
Catalyst: RBNZ next week; Q2 Australia CPI on 29 July.
Risk: AUD continues to underperform even on weaker USD days.
CAD: Stay Short CAD, GDP Today
Focus for CAD today is Canadian GDP.
Our economists expect GDP to rise 0.4% in April after dipping 0.1% in March.
Regular readers know I have been long USD/CAD for the past couple of months.
I still think CAD can continue to underperform.
So I am staying short CAD for now.
Flows yesterday were mixed:
Hedge funds were large CAD sellers.
Real money were CAD buyers.
Trade bias: Short CAD / long USD/CAD.
Catalyst: Canada GDP today.
Economist forecast: +0.4% after -0.1%.
Flow: HF selling, RM buying.
Risk: Strong GDP and oil rebound squeeze shorts.
SEK / NOK: Fading EUR/NOK Into Resistance
Despite firmer equities and oil, NOK underperformed on the day.
Flows were mixed:
HF and SHF sold NOK.
RM demand offset this and has now bought NOK for two consecutive days.
Swedish retail sales fell 0.2% this morning, while April wage growth rose from 3.0% to 3.2%.
SEK has not moved much.
The fall in retail sales continues to suggest a sluggish consumer.
Given the path of monetary policy over the last two years, that remains frustrating for any SEK bulls — if there are any left.
Maybe the temporary gas-tax cut from July to November, together with much lower oil prices since the MOU, will finally lift household consumption.
That is an important measure for the Riksbank.
EUR/NOK: This Is the Zone to Top
This morning’s Norges FX transaction data will get more attention than usual.
It will be interesting to see if there is any adjustment given the fall in Brent.
Today is mostly about rebalancing flows.
But technically, if EUR/NOK is going to top after its 6% rally from the lows, this is the area to do it.
I have faded this move, as mentioned yesterday.
Reasons:
RSI is overbought.
200dma is around 11.38.
This is the February breakdown level.
A two-day close above the Fibonacci level would require a short-term reassessment.
Trade bias: Tactical short EUR/NOK.
Resistance: Around 11.38 200dma / February breakdown zone.
Context: EUR/NOK up 6% from lows.
Flow: RM NOK buying for two days; HF/SHF sellers.
Risk: Two-day close above Fib/200dma zone forces reassessment.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!